Sold MSFT, but at Probably the Worst Time

By Sun

In November 2004, I bought 200 shares of Microsoft. The purchase was to add some tech stocks to my investments as I had only one tech stock (Taiwan Semiconductor) and none of my mutual funds were heavy in technology companies. Though Microsoft was no longer a high-fly stock as it used to be at that time, it’s still a solid company with dominant position in PC software. Plus, it pays dividend. The purchase price was $29.82 a share.

In the past three years, however, the stock went absolutely nowhere. When Microsoft announced stock buyback plan last year, I decided to keep the shares with me because I was hoping that the release of the long anticipated Windows Vista operating system could restore their glory and boost their share price. That didn’t happen. Instead, the stock was hit by production delays and earning disappointment. And every time the stock made a recovery, it dropped again almost immediately.

After seeing this stock went through the seemingly endless one-step forward, one-step backward cycle, my patience finally ran out and cut it loose at $30.23 early this month, though I have heard that the release of Halo 3 was the most successfully entertainment event ever. Today, the stock finally broker the cycle and every MSFT holder is jubilated by the 10% gain after the company released the better-than-expected first quarter earning, which was indeed helped by Vista and Halo

For the past three years, I made a total of $846 from MSFT, mostly are dividends including the $3 special dividend they distributed at the end of 2004. That’s equivalent to an annual return of less then 5%. I probably could do better if I put the money in a savings account.

And what did I do with the proceeds? I bought some ValueClick (VLCK) shares and immediately lost all the money I made from MSFT

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As long as you made the decision that was based on thorough analysis and research then you did the right thing. We cannot time the market and this will happen – I sold Merck at $29 – look where it is now. Move on and learn from the past. Great post Sun.

That should read like an ad for Index funds. Forget about the first commenters comment – what he is suggesting is sector picking rather than stock picking. I am suggesting don’t pick anything.

It has been extensively documented that the vast majority of humans are lousy pickers of stock. Simply buying a total market index will on average give you a higher return than picking, and fewer headaches.

Been there, done that. I sold Mellon Bank too early and then it got acquired by Bank of New York a bit later. The thing is I already had a better idea for investing that money, so missing out on that wasn’t a big deal. Never stop doing investment research, even when you’re holding a position.

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